“What’s The News ?” November 16, 2012

“What’s the news . . . tell me what’s a-happening !” would seem to be the watch words this week. This market is very reactive, and tries to anticipate both good and bad news. Whether it be Syria, the US budget, European debt . . . et al. Once again the saying “If the market is weak, it reacts poorly to bad news; if strong, it doesn’t matter” comes to mind. With this logic, the market is structurally weak. It doesn’t take much bad to send it tanking, and a fair amount of (hopeful) good news to get it to rally back up.

This week we saw volume pick up on down days, thus supply is coming into this market, a sign of distribution of shares. One hopeful day was Friday where the steady down beat stopped and turn around if only for a day. True, Friday COULD be a key reversal day but that won’t be confirmed until Monday.

Trend wise we’re still headed down as witnessed by our Purple line channel. I see no signs of strength as of yet and there is no beginning signs of a price structure that would support an Accumulation phase. Let’s see how this market reacts next week, that should help indicate the near term future. Keep in mind that Friday was options expiration day, so strange movements can and usually occur then or the day before. Also next week is a shortened Holiday week and volume will be unusually light; we may have to wait until the following week at that.

The following pie charts would appear to support the market weakness with far more “Red” than “Green” in them. The Price Strength chart below shows where individual stocks are in the broad S&P 1500 index with relation to their recent trading ranges . . . more Red than Green (or Yellow) . . . . Bearish.

Same goes for the Accumulation / Distribution chart below. Money continues to flow out of this market.

What I’d like to see is a few days of capitulation i.e. a Selling Climax that would bring the final supply of stock into this market followed by a relatively quit period with a few bounces up and down in price. Then it may (just may) be OK to start buying select shares scaling back into this market. But that process may take us well past the end of this year . . unless Congress blesses us with some progress and the international situation stabilizes. Big “If’s” and thus not much to really invest on, but it could happen. Until then we watch and wait.

For those readers in the US, I wish a Happy Thanksgiving holiday and to my International friends I wish all the best . . . hang in there. 🙂 ……… Tom ……….

(As always click on graphics to enlarge them. Price chart courtesy of Metastock; pie charts from www.HighGrowthStock.com; all used with permission. You comments are welcome, post via the link at the top od this posting. Cheers !)